An Aggregation Theorem for the Valuation of Equity Under Linear Information Dynamics

We state an Aggregation Theorem which shows that the recursion value of equity is functionally proportional to its adaptation value. Since the recursion value of equity is equal to its book value plus the expected present value of its abnormal earnings, it follows that the adaptation value of equity can normally be determined by a process of simple quadrature. We demonstrate the application of the Aggregation Theorem using two stochastic processes. The first uses the linear information dynamics of the Ohlson (1995) model. The second uses linear information dynamics based on the Cox, Ingersoll and Ross (1985)'square root' process. Both these processes lead to closed form expressions for the adaptation and overall market value of equity. There are, however, many other processes which are compatible with the Aggregation Theorem. These all show that the market value of equity will be a highly convex function of its recursion value. The empirical evidence we report for UK companies largely supports the convexity hypothesis.     

Why is There a Graduate Earnings Premium for Students From Independent Schools?

We examine the determinants of occupational earnings of UK 1993 graduates and focus on the influence of the type of school the graduate attended prior to university entrance. For data reasons, we restrict attention to graduates who attended school in England. We estimate that, on average, a male (female) graduate who attended an Independent school receives an earnings premium of 3.1 per cent (3.4 per cent) over and above the earnings of a graduate who attended an LEA school, ceteris paribus . We also find considerable variation across different Independent schools in the size of the graduate earnings premium, especially for males, and show that in the case of males the premium increases with the level of school fees, but is not statistically related to measures of school–level average academic performance.     

Danger signs of unethical behavior: How to determine if your firm is at ethical risk

This paper is designed to do three things. First, it discusses some of the key trends in business ethics in the academic and corporate communities. Initiatives like the Arthur Andersen Business Ethics Program are noted. Secondly, the paper examines certain basic misconceptions about the field and concludes that the adage that good ethics is good business is still true. Finally, the paper highlights fourteen business attitudes or practices that may put a firm at ethical risk. For example, the paper discusses the risk of using ethics as simply a public relations initiative.Man's life is not a state of unalloyed happiness. The earth is no paradise. Although this is not the fault of social institutions, people are wont to hold them responsible for it. The foundation of any and every civilization, including our own, is private ownership of the means of production. Whoever wishes to criticize modern civilization, therefore, begins with private property. It is blamed for everything that does not please the critic, especially those evils that have their origin in the fact that private property has been hampered and restrained in various respects so that its full social potentialities cannot be realized.¹ Ludwig von Mises Robert Allan Cooke is Director of the Institute for Business Ethics at DePaul University. He has served as a member of the executive board of the Corporate Responsibility Group of Chicago, the educational subcommittee of Chicago United, and as an academic advisor for the Heartland Institute. He serves as project liason on the advisory council of the Arthur Andersen Business Ethics Program. He is also a management consultant in corporate training who frequently lectures to business and civic groups. His most recent publication is: The Ethical Side of Takeovers and Mergers, with Earl Young, Essentials of Business Ethics (New American Library, 1990).     

Equal opportunity? Women's managerial careers in governmental organizations in China

There is very limited knowledge about women's management careers in China. This paper examines the opportunities for and barriers to women's careers in China, using governmental organizations as an example in which the State is not only the advocate of equal opportunity policies but also, in practice, the gatekeeper. One of the greatest disparities between male and female occupational patterns in China is in the sphere of government employment where only one in five employees is female. The aim of this paper is to understand the Chinese characteristics of gender inequality in management careers. In looking at the factors that influence women's upward mobility, the intention is to identify the barriers to the appointment of women to top jobs. Some barriers will be unique to governmental organizations and so will require special attention if they are to be eradicated. However, women also face more general barriers to success which transcend differences of occupational sector or society. It is hoped that this paper will lead to a greater understanding of how career barriers for women in China may resemble and differ from those faced by their counterparts in the West.     

Regression Analysis in Accounting Disclosure Studies

A problem that sometimes occurs in undertaking empirical research in accounting and finance is that the theoretically correct form of the relation between the dependent and independent variables is not known, although often thought or assumed to be monotonic. In addition, transformations of disclosure measures and independent variables are proxies for underlying constructs and hence, while theory may specify a functional form for the underlying theoretical construct, it is unlikely to hold for empirical proxies. In order to cope with this problem a number of accounting disclosure studies have transformed variables so that the statistical analysis is more meaningful. One approach that has been advocated in such circumstances is to rank the data and then apply regression techniques, a method that has been used recently in a number of accounting disclosure studies. This paper reviews a number of transformations including the Rank Regression procedure. Because of the inherent properties of ranks and their use in regression analysis, an extension is proposed that provides an alternative mapping that replaces the data with their normal scores. The normal scores approach retains the advantages of using ranks but has other beneficial characteristics, particularly in hypothesis testing. Regressions based on untransformed data, on the log odds ratio of the dependent variable, on ranks and regression using normal scores, are applied to data on the disclosure of information in the annual reports of companies in Japan and Saudi Arabia. It is found that regression using normal scores has some advantages over ranks that, in part, depend on the structure of the data. However, the case studies demonstrate that no one procedure is best but that multiple approaches are helpful to ensure the results are robust across methods.     

Merger activity in the waste disposal industry: the impact and the implications of the Environmental Protection Act

Over the last two and a half decades, the UK's waste disposal industry has evolved from a disparate collection of localized small-scale operators to a coherent multimillion pound industry. With particular reference to the 1990 Environmental Protection Act, this paper uses multinomial logit analysis to estimate the degree to which increased regulation of the industry has led to a rise in merger activity within the sector. It is shown that the Act did increase the probability of a waste disposal firm being associated with merger activity, either as an acquiring firm or as a target for other firms. As a result, intra-industry consolidation took place alongside attempts by non-waste disposal firms to diversify their interests within a buoyant sector which was avoiding the recessionary downturn affecting other sectors of the British economy.     

Sleeping giants? Fired workbloggers and labour organisation

This paper argues that the Waterstone's fired blogger incident performed a labour organising function in terms of garnering pro‐labour media attention and encouraging critical discourse. Looking at the blog's distinctive features and evolution, it evaluates the strengths, limitations and potential for recurrence of similar high‐profile incidents.     

The role of disgust sensitivity in volunteer recruitment and retention

In the United States, many volunteers contribute unpaid labor to nonprofit organizations. This labor includes direct volunteer service (working in close physical proximity to individuals who receive assistance, such as homeless and elderly individuals) and indirect volunteer service (administrative or fundraising tasks that do not require direct engagement with the target population). This paper extends the marketing theory of product contagion, in which proximity to disgust‐inducing stimuli devalues consumer products, to preferences for direct versus indirect volunteer activities. A study conducted among U.S.‐based adults found that higher sensitivity to disgust led to a greater preference for indirect volunteer service opportunities over direct volunteer opportunities. This result—which did not differ by gender—was mediated by the likelihood that indirect (vs. direct) volunteering was perceived as representative of volunteer work. Disgust sensitivity did not predict the total amount of volunteer work performed. Implications for recruitment and retention of volunteers are discussed.